Alex McLeish will today finalise his first signing as Birmingham City manager when he secures the services of Hibernian defender David Murphy.

Although Blues have agreed the parameters of a £2.5 million deal they were last night locked in negotiations. The Edinburgh club maintain they want to receive the whole amount paid up front but Birmingham are looking at a staged agreement with £1.5m down payment, a further £500,000 based on appear-ances and most tantalisingly £500,000 more if the left back manages to help keep the club in the Premier League.

McLeish's newly-appointed opposite number at Easter Road, Mixu Paatelainen, is adamant he wants to retain the former Middlesbrough man's services but the resolve of both buyer and player will force the transfer through most likely today.

"No deals are done on that basis these days," Birmingham chairman David Gold said. "They are always half and half some over two years, others over three. They [Hibernian] are just playing hard ball.

"We are not that far apart that we cannot do a deal but we are not going to capitulate to other people's demands. You have got to believe that the player wants to come to the Premier League, in fact I know he does."

Birmingham intend to have Murphy (pictured) in their side for this weekend's visit of Chelsea a match that would mark the Englishman's return to the Premier League after more than three years away.

The Hartlepool-born full back made his league debut against Fulham in February 2002 and went on to play 13 times in the top flight before going on loan to Barnsley in March 2004 and then moving north to join Hibernian in the summer of that year.

Since then he has emerged as one of the top left backs in the SPL and has built a reputation as an accomplished over-lapping wing-back with good defensive awareness.

His arrival is likely to spell the end of Birmingham's only home-grown first-team squad member Mat Sadler who has attracted the interest of Ipswich Town and Watford, the latter a more likely destination.

However, McLeish's top target James McFadden remains a work in progress. Blues have failed with a £4 million bid for the Everton striker and will have to stump up another million pounds if they are to engage the Liverpudlians' interest.

According to a source close to McFadden the Scotland international is desperate to come to St Andrew's and is also hopeful of being in the side by Saturday.

Gold is less sure and expects Everton to hold out for as long as they can with Yakubu and Steven Pienaar away at the African Cup of Nations.

There is also unwanted interest in midfielder Olivier Kapo who has been the subject of three bids from rival Premiership clubs all of which have been turned down.

Fulham and Sunderland have made offers though Steve Bruce's Wigan Athletic are not in the frame.

Blues have also made a surprise move for Argentina youth international Mauro Zarate, according to a statement on the website of Qatari club Al-Sadd.

The Middle Eastern side claim Birmingham have made an approach to take the 20-year-old on loan until the end of the season with the option for a permanent deal after that.

"Al-Sadd club received an offer from the Premier League club Birmingham City to seek the service of the club's Argentina star Mauro Zarate on loan from January until end of the season with a possible ultimate transfer," the statement said.

"Al-Sadd club has no objection to accept the offer. The club would announce a final decision within the forthcoming few days."

Zarate scored the winning goal in the final of the Fifa Under-20 World Cup final last summer and moved to Qatar after being offered a huge salary.

Meanwhile, Asa Hall has gone on loan to Shrewsbury Town for the rest of the season.